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John Simkin
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Ernest Fitzgerald is perhaps the most famous whistle-blower in Washington. While employed by the Pentagon as an engineer and cost expert, he testified to Congress in 1968 and 1969 about the concealed cost overruns and the technical problems of the Lockheed C-5A transport plane. He was fired by Nixon for telling the truth, and wrote about it in "The High Priests of Waste" (1972).

He also wrote about corruption in the Reagan administration (The Pentagonists: An Insider's View of Waste, Mismanagement, and Fraud in Defense Spending). Fitzgerald considers America "the world's largest banana republic." (page 3) "In other banana republics the military comes to power with a sudden coup and the installation of a junta. Here it is different.... America runs on money. And the military has quietly come to vast economic power by taking vast amounts of the federal income for itself." (page 70)

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Ernest Fitzgerald is perhaps the most famous whistle-blower in Washington. While employed by the Pentagon as an engineer and cost expert, he testified to Congress in 1968 and 1969 about the concealed cost overruns and the technical problems of the Lockheed C-5A transport plane. He was fired by Nixon for telling the truth, and wrote about it in "The High Priests of Waste" (1972).

He also wrote about corruption in the Reagan administration (The Pentagonists: An Insider's View of Waste, Mismanagement, and Fraud in Defense Spending). Fitzgerald considers America "the world's largest banana republic." (page 3) "In other banana republics the military comes to power with a sudden coup and the installation of a junta. Here it is different.... America runs on money. And the military has quietly come to vast economic power by taking vast amounts of the federal income for itself." (page 70)

Ernest Fitzgerald is a most interesting character. He fought is firing and with the considerable help of his lawyer John Bodner, eventually won his job back.

Fitzgerald below.

James

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It has been argued that Johnson followed the policies of Kennedy when he became president in November, 1963. This is a myth that was encouraged by Johnson. The two main changes involved Kennedy's tax policy and foreign policy.

In the weeks following the assassination, Johnson was concerned with Kennedy’s tax reform bill that had been submitted to Congress in January 1963. This included the removal of the oil depletion allowance. As Donald Gibson has pointed out: “He (Kennedy) also proposed changes in foreign tax credits which allowed U.S. based oil, gas, and mineral companies to avoid paying U.S. taxes.” (1)

In September, Congress passed the bill after it had deleted many of Kennedy’s proposals to close tax loopholes, including the abolition of the oil depletion allowance. When Kennedy was assassinated, the Senate Finance Committee, chaired by Harry Byrd of Virginia, was still discussing the proposed legislation.

Johnson feared that in a wave of sympathy, the Senate might now agree to Kennedy’s original proposals. A few days after the assassination, James Reston wrote in the New York Times: “President Kennedy had to die to create a sympathetic atmosphere for his program.” (2)

The day after Kennedy was assassinated, Johnson phoned up George Smathers, his man on the Finance Committee: “Tell me, what is the situation on the tax bill?” Smathers replies: “I made a deal, just confidentially, that Ribicoff and Long and myself and Fulbright would vote against any motion to take the bill away from the Chairman. He (Harry Byrd) would agree to close the hearings.” He adds “the smart thing to do, in light of developments, would be for you to get the appropriation bill through real quick.” (3) Johnson follows Smathers’ advice and the issue of the oil depletion allowance is removed from the agenda.

The main change that Johnson makes to Kennedy’s policies concerns his foreign policy. As David Kaiser points out in American Tragedy, Johnson returned to Eisenhower policy “which decided upon a militant response to any new Communist advances virtually anywhere on the globe.” (4)

One of Johnson’s first decisions was to move Kennedy’s Ambassador to Mexico, Thomas C. Mann, to the post of Under Secretary of State for Latin American Affairs. Mann, a fellow Texan, had held liberal views during the early 1950s, he had for example, argued against the CIA overthrow of Jacobo Arbenz in Guatemala. However, by 1963, he shared the Eisenhower/Johnson view of international communism.

Johnson also called off the secret meetings that were taking place between Fidel Castro and people like Lisa Howard on behalf of the Kennedy administration. On 12th February, 1964, Howard took a message from Castro to Johnson asking for negotiations to be restarted. It included the following comment about the forthcoming presidential election campaign: “If the President feels it necessary during the campaign to make bellicose statements about Cuba or even to take some hostile action - if he will inform me, unofficially, that a specific action is required because of domestic political considerations, I shall understand and not take any serious retaliatory action.” (5)

When Johnson did not respond to this message she contacted Adlai Stevenson at the United Nations. On 26th June 1964, Stevenson sent a memo to Johnson saying that he felt that "all of our crises could be avoided if there was some way to communicate; that for want of anything better, he assumed that he could call (Lisa Howard) and she call me and I would advise you." (6) In a memorandum marked top secret, Gordon Chase wrote on 7th July that it was important "to remove Lisa from direct participation in the business of passing messages" from Cuba. (7)

It was at this point that negotiations between Johnson and Castro came to an end. Peter Kornbluh, a researcher at Washington's National Security Archives who has reviewed all the new evidence, recently told the Guardian newspaper: "It shows that the whole history of US-Cuban relations might have been quite different if Kennedy had not been assassinated." (8)

Lyndon Johnson showed little interest in either negotiating with, or removing, Fidel Castro. As he told Dean Rusk, Maxwell Taylor and John McCone on 2nd December, 1963, South Vietnam is “our most critical military area right now.” David Kaiser points out that Johnson “never seriously considered the alternatives of neutralization and withdrawal.” Kaiser adds: “Johnson, in short, accepted the premises of the policies that had been developed under Eisenhower – premises whose consequences Kennedy had consistently refused to accept for three years.” (9)

Johnson also opposed Prince Sihanouk’s new proposal for a conference on Cambodian neutrality. Johnson feared this would encourage Thailand and South Vietnam to follow the neutral policy that had been with Kennedy’s encouragement, achieved by the government in Laos. He also rejected suggestions by Mike Mansfield for a truce in Vietnam as he did not want “another China”. Mansfield replied, that the “United States did not want another Korea either”. (10)

Johnson told General Paul Harkins that it was necessary to “make clear that the US will not accept a Communist victory in South Vietnam and that we will escalate the conflict to whatever level is required to insure their defeat.” (136) According to Stanley Karnow, Johnson told the joint chiefs at a White House reception on Christmas Eve 1963, "Just let me get elected, and then you can have your war." (11)

In February, 1964, Johnson removed Roger Hilsman as Assistant Secretary for the Far East. Hilsman, who had been in charge of Kennedy’s Vietnam policy, had been a loyal supporter of his neutralization policy. Hilsman was replaced by William Bundy, who shared Johnson’s views on military involvement in Vietnam.

In an interview for the 1999 CNN Cold War documentary on the Vietnam War, Hilsman explained Kennedy’s policy during 1963: “First of all, from the beginning, he was determined that it not be an American war, that he would not bomb the North, he would not send troops. But then after …you remember the Buddhist crisis in the spring of '63, this convinced Kennedy that Ngu Dinh Diem had no chance of winning and that we best we get out. So, he used that as an excuse, beat on McNamara to beat on the JCS to develop a withdrawal plan. The plan was made, he approved the plan and the first one thousand of the sixteen thousand five hundred were withdrawn before Kennedy was killed. If he had lived, the other sixteen thousand would have been out of there within three or four months.”

Hilsman went onto explain how Johnson changed policy towards Vietnam: “Well, what Johnson did was, he did one thing before he expanded the war and that is he got rid of one way or another all the people who had opposed making it an American war. Averill Harriman, he was Under Secretary of State, he made him roving ambassador for Africa so he'd have nothing to do with Vietnam. Bobby Kennedy, he you know, he told Bobby Kennedy that he ought to run for governor of Massachusetts, you see. Bobby confounded him by running for the Senate… He wanted to get rid of me, Lyndon Johnson did. Well, Johnson's a very clever man. When he wanted to get rid of Grenowski, who was the Postmaster General, he offered him the chance of being the first American ambassador to Poland. he offered me... he found out that I'd spent part of my childhood in the Philippines, and he tried to persuade me to become ambassador to the Philippines, but that was just to keep me quiet, you see and so instead I went to Columbia University, where I could criticize the war from outside. Johnson was a very clever man, so the first thing he did was he nullified or got rid of all the people - and he knew as well, he knew who were the hawks and who were the doves… Johnson literally transferred, fired, drove out of government all the people that were really knew something about Vietnam and were opposed to the war. (12)

Robert Komer sent a memo to McGeorge Bundy showing concern about Johnson’s decision to reverse Kennedy’s foreign policy. He complained that this new “hard line” would “increase the chances that in addition to the Vietnam, Cuba, Cyprus, Panama and other current trials – will be added come summer Indonesia/Malaysia, Arab/Israeli, India/Pakistan crises which may be even more unmanageable.” (139)

On 2nd March, 1964, Johnson telephoned Robert McNamara, to prepare a statement on Vietnam. Two days later, McNamara issued a statement rejecting withdrawal, neutralization, or American ground troops. This was discussed with the five Joint Chiefs of Staff. General Maxwell Taylor argued for “the progressive and selective attack against targets in North Vietnam”. General Curtis LeMay advocated an immediate “hard blow”. Johnson replied he did “not want to start a war before November”. (13)

Later that month, a group of generals, with the approval of Johnson, overthrew Joao Goulart, the left-wing president of Brazil. This action ended democracy in Brazil for more than twenty years. Once again, Johnson showed that his policy was to support non-democratic but anti-communist, military dictatorships, and that he had fully abandoned Kennedy’s neutralization policy.

In June, 1964, Henry Cabot Lodge, resigned as ambassador of Saigon. McGeorge Bundy gave Johnson six recommendations for his successor: Robert Kennedy, Sargent Shriver, Robert McNamara, Roswell Gilpatric, William Gaud and himself. Johnson rejected all the names on the list and instead selected General Maxwell Taylor. Bundy complained bitterly that Johnson had appointed a military man. However, Johnson, who was determined to have a war in Vietnam, replied that the ambassador of Saigon would soon be a “military job” and that Taylor was “our top military man”. (14)

Johnson always intended to wait until after the election in November, 1964, before beginning the war against Vietnam. Public opinion polls showed that the American people were overwhelmingly against sending combat troops to South Vietnam. Most leading figures in the Democratic Party shared this view and had told Johnson this was a war he could not win as China was likely to send troops into Vietnam if the country was bombed or invaded.

Johnson’s strategy changed when the right-wing Barry Goldwater won the Republican Party nomination in July. Goldwater had been arguing that Johnson had not been aggressive enough over Vietnam. When interviewed by Howard K. Smith on television, Goldwater argued that the United States should start bombing North Vietnam. Smith suggested that this “risked a fight with China”. “You might have to do that” Goldwater responded.” On other occasions, Goldwater had insisted that atomic weapons should be used in Vietnam. (15)

Johnson was now free to trigger a war with North Vietnam. He therefore gave permission for OPLAN 34A to be executed. This was a new operations plan for sabotage operations against North Vietnam. This included hit-and-run attacks along the North Vietnamese coast. On 30th July, the American destroyer, the Maddox, left Taiwan for the North Vietnamese coast. On 2nd August, the Maddox opened fire on three North Vietnamese boats, seriously damaging one boat but not sinking it. (16)

Later that day the incident was discussed by Lyndon Johnson, Dean Rusk, George Ball, General Earle Wheeler and Robert McNamara’s new deputy, Cyrus Vance. As a result of the meeting, Vance approved new attacks on North Vietnam beginning on the night of 3rd August.

Soon after entering North Vietnamese waters on 4th August, Captain Herrick of the Maddox reported that he was under attack. However, later he sent a message that raised doubts about this: "Review of action makes reported contacts and torpedoes fired appear doubtful. Freak weather reports and over-eager sonar men may have accounted for many reports. No actual sightings by "Maddox". Suggest complete evaluation before further action." David Kaiser argues that “exhaustive analysis of the evidence makes it impossible to believe that any attack occurred that night.” (17)

Despite this, President Johnson immediately ordered “a firm, swift retaliatory strike” against North Vietnamese naval bases. (18) He ordered the bombing of four North Vietnamese torpedo-boat bases and an oil-storage depot that had been planned three months previously.

President Johnson then went on television and told the American people that a total of nine torpedoes had been fired at American ships and as a result he had ordered a retaliatory strike. Warned by Johnson’s announcement, the North Vietnamese managed to bring down two American planes, killing one pilot and capturing the other. (19)

Congress approved Johnson's decision to bomb North Vietnam and passed what has become known as the Gulf of Tonkin resolution by the Senate by 88 votes to 2 and in the House of Representatives by 416 to 0. This resolution authorized the President to take all necessary measures against Vietnam and the National Liberation Front (NLF).

As James Reston pointed out in the New York Times: “The Congress was free in theory only. In practice, despite the private reservations of many members, it had to go along… it had the choice of helping him or helping the enemy, which is no choice at all.” He then added, as a result of this resolution, who could be trusted with this enormous new power – Johnson or Goldwater?” (20)

As David Kaiser has argued convincingly in his book, American Tragedy: Kennedy, Johnson and the Origins of the Vietnam War: “By initiating 34A attacks and simultaneously authorizing DeSoto patrols, the administration had brought about one brief military confrontation between North Vietnamese and American forces. The second spurious attack had then become the pretext for retaliation, a congressional resolution authorizing war, and the movement of additional U.S. air assets into South Vietnam.” (21)

Why then was Lyndon Johnson so keen to start a war with North Vietnam? One view is that he was convinced by people such as General Maxwell Taylor and Robert McNamara that it would be fairly easy to defeat communism in Vietnam. However, this is not supported by the evidence. On 27th May, 1964, Johnson had a long telephone conversation with his close friend and adviser, Richard Russell. Johnson asked Russell: “What do you think of this Vietnam thing?” Russell replied that Johnson should get completely out of Vietnam: “If I was going to get out, I’d get the same crowd that got rid of old Diem to get rid of these people and get some fellow in there that said he wished to hell we would get out. That would give us a good excuse for getting out” This is of course a strategy that Kennedy had been considering the previous summer.

Russell added that if Johnson did send combat troops into Vietnam the United States would end up fighting a “major war with the Chinese” and the situation would end up worse than Korea. Johnson agreed with Russell on this and also admitted that he had doubts about the value of saving South Vietnam and Laos from communism.

Despite agreeing with Russell he rejected the idea of withdrawal as it would have a detrimental impact on his image. Russell replied: “You’d look pretty good, I guess, going in there with troops and sending them all in there, but I tell you it’ll be the most expensive venture this country ever went into.” (149)

Is it possible that what attracted Johnson to the Vietnam War was that it would be “the most expensive venture this country ever went into”? Let us look at the people who made money from Johnson’s decision to start a war in Vietnam.

Probably the single most important beneficiary was George R. Brown. The two men had been close friends since Johnson’s 1937 election campaign. At that time, George and Herman Brown ran a small construction company in Texas called Brown & Root. The brothers agreed to help fund Johnson’s political campaigns in return for help obtaining federal contracts. (22)

Over the next few years Brown and Root grew rapidly as a result of obtaining a large number of municipal and federal government projects. This included the Marshall Ford Dam on the Colorado River. This was worth $27,000,000. In a letter written to Johnson, George Brown, admitted the company was set to make a $2,000,000 profit out of the deal. In 1940 the company won a $90 million contract to build the Naval Air Station at Corpus Christi. (23)

In 1942 the Brown brothers established the Brown Shipbuilding Company on the Houston Ship Channel. Over the next three years the company built 359 ships and employed 25,000 people. This was worth $27,000,000. This contract was eventually worth $357,000,000. Yet until they got the contract, Brown & Root had never built a single ship of any type. (24)

In the 1950s Brown & Root constructed air and naval bases in Spain, France and Guam for the United States government. The company also built roads, dams, bridges, petrochemical plants and large offshore drilling platforms. In 1961 the company won the contract for the $200 million Spacecraft Center in Houston. (25)

Herman Brown died in November, 1962. George Brown replaced his brother as president and later that year, sold the company for $37.7 million to Halliburton, another Texas company involved in government work. (26) Brown remained in charge of Brown & Root, and over the next few years made a great deal of money for Halliburton. (27)

The Vietnam War completely transformed Brown & Root’s fortunes. As Robert Bryce has pointed out: “Before Vietnam, Brown & Root was an arm’s length civilian contractor to the U. S. military. During the war in Vietnam, Brown & Root became part of the military. The war also established Brown & Root as one of the biggest and most important construction companies in America.” (28)

In 1965 Brown & Root joined forces with Raymond International, Morrison-Knudsen and J. A. Jones Corporation to form RMK-BRJ. This consortium was awarded government contracts worth nearly $2 billion during the Vietnam War. Brown & Root obtained revenues from this deal of over $380 million ($2.2 billion in 2006 dollars). George Brown was also able to negotiate a cost-plus contract. Whatever it spent doing each project, the government guaranteed that it would pay the company a profit on top of its costs. Brown & Root expanded the harbors at Saigon, Cam Rahn Bay and Da Nang. It also built the Phan Rang Air Force Base. (29)

By 1966 RMK-BRJ had 52,000 employees working in South Vietnam. This included construction and engineering jobs normally done by soldiers from the Army Corps of Engineers. It was the Vietnam War that began the mass privatization of military duties.

It was not long before RMK-BRJ was being accused of exploiting the American taxpayer. Abraham Ribicoff claimed that federal money was “being squandered because of inefficiency, dishonesty, corruption and foolishness.” The U.S. General Accounting Office agreed with Ribicoff and in 1967 it published a report criticizing RMK-BRJ, saying that the consortium “could not account for the whereabouts of approximately $120 million worth of materials which had been shipped to Vietnam from the United States.” (30)

By 1969 Brown & Root had become the biggest construction company in America. (31) It was not the only company in Texas to experience rapid growth as a result of the Vietnam War. Bell Helicopter Corporation, based in Fort Worth, also made a great deal of money during the conflict.

Johnson had enjoyed a long and profitable relationship with the company. Lawrence Bell had provided money for Johnson’s 1948 election campaign. In fact, Bell supplied Johnson with free use of a 47-B helicopter. As Robert Bryce has pointed out: "With a helicopter, Johnson could land right in the center of town and give a speech right on the landing spot, eliminating the need for time-wasting car trips and from the airstrip." (32)

At this time, Bell Helicopter Corporation was based in California. However, with encouragement from Johnson, Bell moved the helicopter plant to Fort Worth and joined the Suite 8F Group. (33) By 1960 the Bell Helicopter Corporation was in serious financial difficulties. However, during the Vietnam War, the company’s fortunes were transformed.

The UH-1 (Huey) was used extensively by the U.S. military during the war. By 1967 the Fort Worth plant was employing 11,000 workers who were producing 200 helicopters a month. 160 of which were for the American military.

General Dynamics, also based in Texas, and like the Bell Helicopter Corporation, had been close to bankruptcy in 1960. Once again the Vietnam War helped to increase profits. In 1967 some 83 percent of its sales were to the government. (34) When the F-111 proved to be a complete disaster, the company was given the FB-111, the bomber version of the TFX, instead. This contract alone was estimated to be worth $24 billion. (35)

Notes

1. Donald Gibson, Battling Wall Street: The Kennedy Presidency, 1994 (page 23)

2. James Reston, New York Times (28th November, 1963)

3. Lyndon B. Johnson, telephone conversation with George Smathers (9.01 p.m., 23rd November, 1963)

4. David Kaiser, American Tragedy: Kennedy, Johnson and the Origins of the Vietnam War, 2000 (page 2)

5. Message sent by Fidel Castro via Lisa Howard on 12th February, 1964.

6. Adlai Stevenson, memorandum sent to Lyndon Johnson on 26th June, 1964.

7. Gordon Chase, White House memorandum, 7th July, 1964

8. Julian Borger, The Guardian (23rd November, 2003)

9. David Kaiser, American Tragedy: Kennedy, Johnson and the Origins of the Vietnam War, 2000 (pages 288-290)

10. Mike Mansfield, memorandum sent to Lyndon Johnson (6th January, 1964)

11. David Kaiser, American Tragedy: Kennedy, Johnson and the Origins of the Vietnam War, 2000 (page 292)

12. Stanley Karnow, Vietnam: A History, 1991 (page 342)

13. Roger Hilsman, The Vietnam War, CNN (broadcast on 6th December, 1998)

14. Robert Komer, memo to McGeorge Bundy (25th February, 1964)

15. David Kaiser, American Tragedy: Kennedy, Johnson and the Origins of the Vietnam War, 2000 (page 304)

16. Michael R. Beschloss, Taking Charge: The Johnson White House Tapes, 1997 (pages 407-411)

17. Rick Perlstein, Before the Storm, 2001 (pages 346-347)

18. Edwin E. Moise, Tonkin Gulf and the Escalation of the Vietnam War, 1996 (pages 73-74)

19. David Kaiser, American Tragedy: Kennedy, Johnson and the Origins of the Vietnam War, 2000 (page 334)

20. Michael R. Beschloss, Taking Charge: The Johnson White House Tapes, 1997 (pages 503-504)

21. Edwin E. Moise, Tonkin Gulf and the Escalation of the Vietnam War, 1996 (pages 214-231)

22. James Reston, New York Times (9th August, 1964)

23. David Kaiser, American Tragedy: Kennedy, Johnson and the Origins of the Vietnam War, 2000 (page 338)

24. Telephone conversation between Richard Russell and Lyndon B. Johnson (10.55 a.m. 27th May, 1964)

25. Craig Zirbel, The Texas Connection, 1991 (page 112)

26. Robert Caro, The Years of Lyndon Johnson: The Path to Power, 1982 (pages 369-385)

27. Dan Briody, The Halliburton Agenda: The Politics of Oil and Money, 2004 (pages 86-87)

28. Alfred Steinberg, Sam Johnson’s Boy, 1968 (page 577)

29. Robert Bryce, Cronies: Oil, the Bushes, and the Rise of Texas, 2004 (page 109)

30. Robert Sherrill, The Accidental President, 1967 (page 244)

31. Robert Bryce, Cronies: Oil, the Bushes, and the Rise of Texas, 2004 (page 105)

32. Joseph A. Pratt & Christopher J. Castaneda, Builders: Herman and George R. Brown, 1999 (page 243)

33. General Accounting Office, Report on United States Construction Activities in the Republic of Vietnam, 1965-1966 (67-11159)

34. Kirkpatrick Sale, Power Shift, 1975 (42-43)

35. Robert Bryce, Cronies: Oil, the Bushes, and the Rise of Texas, 2004 (page 59)

36. Joseph A. Pratt & Christopher J. Castaneda, Builders: Herman and George R. Brown, 1999 (pages 158-59)

37. Robert Bryce, Cronies: Oil, the Bushes, and the Rise of Texas, 2004 (page 107)

38. I. F. Stone, I. F. Weekly, 1st January, 1969

39. I. F. Stone, I. F. Weekly, 5th June, 1969

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A very fine post, John.

The contrast between JFK and LBJ and their respective agendas is well illustrated. On one hand there's JFK who took foreign policy very seriously and was prepared to do the painstaking work of finding a solution which would be satisfactory to all sides, as he did in Laos. His knowledge of foreign policy and ability to listen to and empathise with other nations appeared to be bearing fruit at the time of his death--evidenced by Castro offering a concession like that in order to continue the Cuban-American dialogue. This showed that JFK had earned the trust and respect of foreign leaders, regardless of ideology.

Then there's LBJ, who wasted no time frittering away that hard earned goodwill which JFK had established by behaving merely as an agent for the MICIC, with little consideration for the long term ramifications for his country. I doubt he understood or even cared about foreign policy--it was just a vehicle employed to enrich his friends and benefactors. Ditto for his tax policy.

November 22, 1963 was a very bad day for America.

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During the Eisenhower administration, John Williams, the Republican senator from Delaware, began revealing details of what became known as the “Stockpile Scandal”. Williams was the same person who was later to expose the “Bobby Baker Scandal”.

Williams claimed that George M. Humphrey, Eisenhower’s Secretary of the Treasury, was behind this corrupt operation. In the early stages of the Korean War, Harry Truman had established the Office of Defense Mobilization (ODM). This authorized the creation of stockpiles of raw materials that were important in the fight against international communism. The General Services Administration (GSA) was the operating agency for the program. As this scheme involved national defence, it was decided that this policy would be kept secret from the American public.

Humphrey knew about this secret policy because he was chairman of M. A. Hanna Company. Humphrey’s company owned the mineral rights on Nickel Mountain in Oregon. The Hanna Mining Company provided large amounts of nickel ore for the ODM stockpile. Soon after becoming Secretary of the Treasury in January, 1953, he contacted ODM and suggested that it should sign two contracts with the Hanna Company. The first one involved buying nickel ore for $6 a ton (this was much higher than the market rate). The second one was that the ODM was to sell back the nickel ore to Hanna at the same price for it to be smelted. This would cost a further $6 a ton for processing. Hanna did not have a smelting plant so it asked for the ODM to spend $22 million on building them one. This was agreed and by 1961 over $100 million had been spent by the government on these Hanna contracts.

The same thing went on in the purchasing of unneeded lead, zinc, copper, chromite, molybdenum, cryolite, tungsten, manganese and aluminium. The companies concerned who provided these raw materials charged a much higher rate than the market price. In effect, they were getting a government subsidy for producing these materials.

One of the most amazing aspect of this scheme was that when prices were high, the ODM allowed the companies to buy the raw materials back at the original prices to sell on the open market at a higher price. For example, the Calumet & Helca Company, was able to buy back copper in 1958 for $26,093,314 (the price it sold it for in 1955) to sell at $29,086,616 on the open market.

John Williams passed all his information to President Kennedy and on 31st January, 1962, he ordered federal investigators to looking into the stockpiling of these raw materials. He said: “It was apparent to me that this excessive storage of costly materials was a questionable burden on public funds and in addition a potential source of excessive and unconscionable profits.”

Kennedy told the nation that the raw material stockpiles were worth $7.7 billion. It was calculated that this exceeded the stockpile needs by nearly $3.4 billion. The value of the aluminium in the stockpile exceeds the amounts we would need for three years in the event of a war by $347 million. The excess supply of nickel is $103 million.”

A Senate Committee led by Stuart Symington later reported that: “The evil of the price support program was that it loaded the stockpile with greater quantities of unneeded materials at a time when the Defense Department was seeking funds for more urgent defense needs. This was done without public knowledge under a cloak of secrecy imposed because of the supposed demands of national security. Perhaps the primary lesson to be learned from this unfortunate stockpiling episode is that stockpile operations should be conducted with the full knowledge of the American taxpayer.”

Only three senators, Stuart Symington, Claire Engle and Howard W. Cannon (all Democrats) signed this highly critical report. Clifford Case and J. Glen Beall, the two Republicans refused to sign. So also did the Democrat, Strom Thurmond. As a result, the case got very little publicity and Kennedy privately condemned the way the media protected the Eisenhower administration. Interestingly, none of Humphrey's web biographies mention this scandal.

I wonder if there is any connection with this scandal with the appointment of Douglas Dillon as Secretary of the Treasury. Dillon had worked under George M. Humphrey during the Eisenhower administration. His choice of a Republican as Secretary of the Treasury caused a great deal of concern at the time. We now know he got the post as a result of lobbying by Lyndon Johnson and Philip Graham. We also know that Strom Thurmond was under the control of LBJ.

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Dan Briody points out in the Halliburton Agenda (page 160): “With Johnson in the White House, Albert Thomas holding the purse strings for government agencies (as the chair of the House Appropriations Committee), and George Brown acting on several business advisory councils and presidential commissions” the Suite 8F Group was in a very powerful position after the election.

Briody adds that at the time Life Magazine published a cartoon of Kennedy with Johnson. Kennedy says to Johnson: "Now, Lyndon, I guess we can dig that tunnel to the Vatican." Johnson replies: "Okay, so long as Brown & Root get the contract."

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According to Ralph E. Lapp, in the 1960s Lockheed sales to the Pentagon came to 88% of its total sales, McDonnell Douglas (F-4 Phantom bomber) 75 per cent, General Dynamics (F-111 fighter bomber) 67 per cent, and Boeing (B-52 heavy strategic bombers) 54 per cent. (1)

These figures reveal a serious problem faced by the arms industry. What happens when the Vietnam War came to an end? In 1967 the Electronics Industries Association commissioned a report into the future of US military spending. It concluded that the future looked good as arms control agreements “during the next decade are unlikely”. (2) It would seem that the arms industry no longer feared the negotiated deals favoured by John F. Kennedy.

This was confirmed by Samuel F. Downer, vice-president of the LTV Aerospace Corporation based in Texas. In an interview with Bernard D. Nossiter of the Washington Post, Downer argued that Johnson was committed to increasing military spending: “If you’re the President… you can’t sell Harlem and Watts but you can sell self-preservation…We’re going to increase defence budgets as long as those bastards in Russia are ahead of us. The American people understand this.” (3) The real task, as always, was to convince the American public that the Soviet Union was ahead in the arms race and provided a significant threat to the security of the United States. This they were able to do until 1989. Then a new enemy had to be found. This now takes the form of Muslim Fundamentalists. Military spending in the United States is now at an all-time high and it is the same corporations who depend on this conflict for their survival.

Notes

1. Ralph E. Lapp, The Weapons Culture, 1968 (pages 186-87)

2. Sidney Lens, The Military Industrial Complex, 1970 (page 55)

3. Bernard D. Nossiter, Washington Post (8th December, 1968)

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An important figure in the MICIC died yesterday - Caspar Weinberger. This is his obituary from today's Guardian:

http://www.guardian.co.uk/obituaries/story...1741661,00.html

Harold Jackson

Wednesday March 29, 2006

The Guardian

Caspar Weinberger, who has died aged 88, was among the best friends the Pentagon ever had. In his seven years as US defence secretary (1981-87), he lavished unprecedented peacetime funds on military hardware, raising the annual defence bill by 50% in real terms, at a weekly cost to the American taxpayer of $6bn. This extraordinary arms race helped the Reagan administration plunge the United States into a national debt of $2,600bn, more than that achieved by any previous president.

Weinberger met virtually every demand put forward by the services - there were 90 more naval ships, two divisions for the army, costing $10bn a year to maintain, and 94 B-1B bombers, worth $200m each, for the air force. He also embarked on Star Wars, the wildly expensive Strategic Defence Initiative, which has still not been made workable after an investment of $50bn.

Yet there was little evidence of a coherent strategy behind this profligacy. Each of the services was left largely to pursue its own course, often in competition with the others. There were the inevitable scandals about the misuse of this largesse. Halfway through Weinberger's tenure a defence department audit team uncovered fraud in 10% of the contracts it monitored. Even manufacturers who played fair had an incentive to bump up their costs, with contracts written so that profits automatically rose by a similar proportion.

This meant the Pentagon could be charged $2,000 for a standard half-inch nut and $33 for a canteen sandwich. In addition, by 1985 the country's largest defence contractor, General Dynamics, had paid no federal taxes for 13 years.

But Weinberger's abrasive personality left him convinced that his policy was the only valid option. His memoirs contained waspish attacks on such varied officials as budget director David Stockman for disloyalty; on secretary of state Alexander Haig for ignorance of the US constitution; and on national security adviser Robert McFarlane as "a man of evident limitations which he could not hide". His running feud with Haig's successor at the state department, George Shultz, repeatedly paralysed American foreign policy, especially in the Middle East.

Weinberger's public career wound up in near ignominy when he became the most senior member of the Reagan cabinet to be indicted for perjury and obstruction of justice during the Iran-Contra scandal. The charges arose from his testimony to a congressional investigation that he had known nothing about the illegal sale of arms both to Iran and to anti-government guerrillas in Nicaragua. (Had he admitted such knowledge he would have had to testify that Reagan possessed it too.) Later, investigators found 1,700 pages of notes in his handwriting confirming that he had, indeed, had advance knowledge of the plan. In December 1992, in spite of congressional opposition, President George Bush granted Weinberger an executive pardon days before the case came to trial.

Under his father's influence, Weinberger had been steeped in politics from his childhood in San Francisco. One of his clearest memories was listening, at the age of seven, to the radio coverage of the infamous 1924 Democratic convention, which took 102 ballots to pick Wall Street lawyer John Davis as its (losing) presidential nominee. By adolescence, his instincts were firmly conservative. He thought the election of Franklin Roosevelt a terrible mistake and became notorious as a student for the rightwing editorials he penned as editor of the Harvard Crimson. Academically, he did extremely well, graduating summa cum laude and being offered a scholarship to Cambridge. However, he decided to follow his father into the law, graduating from Harvard Law School in 1941.

By now a convinced Anglophile, he tried to enlist in the Canadian air force but was rejected because of his poor eyesight. He volunteered for the US army and, after the Japanese attack on Pearl Harbor, was sent to New Guinea with the 41st Infantry Division. He finished his military service on General MacArthur's intelligence staff.

After a brief spell practising law, he was elected to the California state legislature in 1952 as a liberal Republican, where he quickly made his name as leader of a group determined to cleanse the state government. Their campaign saw a number of officials prosecuted for corruption and the introduction of tighter regulations. He became chairman of the California Republicans in 1962, but blotted his copybook with conservative members by supporting Nelson Rockefeller as the 1964 presidential nominee instead of Barry Goldwater.

Two years later, he initially backed Reagan's opponent in the California gubernatorial primary, though, when Reagan secured the nomination, Weinberger joined his campaign team. He was pointedly ignored in the initial appointments but, after a year of financial chaos, a group of state legislators urged Reagan to appoint Weinberger as director of finance. In a series of policy shifts, he first raised state taxes, then lowered them, and then raised them to a point where personal taxation had doubled.

California wound up with a vast revenue surplus, which, though it eventually generated a taxpayers' revolt, sufficiently impressed President Richard Nixon to make Weinberger head of the federal trade commission in 1970. Within six months, he had shed two-thirds of the senior staff and created a highly activist bureau of consumer affairs. Among its early campaigns, the bureau mounted a fierce attack on the car industry's quality control and called for greater regulation on vehicle design, a stance that did not win Weinberger many friends among conservative Republicans.

He did better when Nixon made him budget director in 1972. His assault on social spending earned him the soubriquet "Cap the Knife" and he was soon in deep conflict with Congress. When the legislature refused to reduce appropriations for social programmes, Weinberger simply impounded the money. He continued this policy as secretary for health, education and welfare. In 1973, he seized more than $1bn of federal health funds, until he was ordered by a federal court to release the money.

Because of his wife Jane's ill-health, he resigned from the Nixon administration in 1975 and returned to California. The Bechtel Corporation created the job of special counsel for him and eventually made him a vice-president at the then huge salary of $500,000 a year. By the time Reagan made him defence secretary, his personal fortune was reported to be $3m. After leaving the government in November 1987, he became publisher and chairman of Forbes Magazine and joined a Washington law practice. In 1988, he was awarded an honorary knighthood by the Thatcher government for the support he had given British forces during the Falklands war. He is survived by Jane, and his son and daughter.

Caspar Willard Weinberger, politician and lawyer, born August 18 1917; died March 28 2006

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  • 2 weeks later...

It has been announced that BAE Systems, the British military contractor is in talks with the European Aeronautic, Defence & Space consortium to sell its 20 percent stake in Airbus. This will bring to an end a nearly 30 year partnership that spawned the world’s largest passenger plane. It is estimated that the stake is worth 6 billion.

According to the International Herald Tribune (8th April) the decision to sell is linked to Blair’s foreign policy. The newspaper quotes Andy Lynch, a fund manager with Schroder Investment Management, as saying that Blair willingness to send troops to Iraq and Afghanistan has made the arms industry a more predicable business than the aircraft industry. Especially as Blair has been very keen to give BAE long-term government contracts (the company specializes in land-based artillery). BAE is also a major supplier to the Pentagon. In fact, in the past two years it has bought six military contracting companies in the United States.

The Herald Tribune claims that BAE is in the process of transforming itself into a quasi-American company (in the same way that Blair is a quasi-American prime minister). Apparently it is currently trying to takeover L3 Communications Systems (surveillance systems) and Raytheon (missile maker). BAE Systems is now the world's 4th largest arms company. Each year it sells arms worth around £11bn across the globe.

Is it possible that Blair is involved in a corrupt relationship with BAE and Boeing? For example, Airbus booked record orders for 1,055 passenger planes last year, versus 1,002 for Boeing. With the success of the A380 Airbus is in a good position to become the world’s leading aircraft production company in the world. Business analysts are saying that BAE’s decision to sell is undermining confidence in the A380 and will help its main rival, Boeing.

Is it possible that BAE is to Tony Blair what General Dynamics, Brown & Root, Halliburton and Bell Corporation were to Lyndon Baines Johnson?

Is it possible that it was really the agents of BAE that has been loaning money to Blair and New Labour (covered up by the claims of Lord Sainsbury)? Here is an account of Blair’s relationship with BAE that appeared on the Campaign Against Arms Trade website:

http://www.caat.org.uk/publications/companies/baes.php

BAE Systems has a turbulent relationship with the MoD and has faced accusations of heavy-handed lobbying tactics and poor project management. However, whatever its problem with the Ministry and its civil servants, BAE Systems can always rely on Tony Blair.

Ever since Blair arrived in government in 1997 it has been apparent that he has supported BAE Systems against all comers and all rational argument. He pushed through controversial sales to Zimbabwe and Tanzania and lobbied, amongst others, the South Korean and South African Presidents on behalf of BAE Systems.

Striking confirmation of the relationship was provided by Robin Cook in his book 'The Point of Departure'. He states 'In my time I came to learn that the Chairman of British Aerospace appeared to have the key to the garden door to Number 10. Certainly I never once knew Number 10 to come up with any decision that would be incommoding to British Aerospace'.

The extent to which Blair's love of BAE Systems permeates the UK government isn't entirely clear, but it is clear that BAE Systems receives 5-star treatment from a wide variety of official sources:

• minister after minister trooped out to promote the sale of the Hawk aircraft to India, regardless of the level of conflict over Kashmir.

• corruption allegations, reported to the government, have not been fully investigated.

• changes to guidelines have weakened arms export controls in areas relevant to BAE Systems, most obviously those announced in July 2002 which facilitated the transfer of the company's equipment to Israel via the US.

• the DSEi and Farnborough arms fairs receive financial assistance and ministerial support.

• the Defence Export Services Organisation continues to dedicate 600 civil servants to the arms trade under the leadership of an arms industry boss, currently seconded from BAE Systems.

• there is a proliferation of 'advisory bodies' which give the major arms companies preferential access to civil servants and ministers.

• a new Missile Defence Centre has appeared for no apparent reason other than to help UK companies win US 'Son of Star Wars' contracts, with BAE Systems as the lead contractor.

• and to bring things right up to date, just last month Prince Andrew and the UK's Ambassador to Bahrain opened BAE Systems' first office in Bahrain.

The reason for Blair's affection for BAE Systems isn't immediately obvious. It's often assumed that UK jobs lie at the heart of his interest but BAE Systems' record on that score is poor. In 2003 it stated that it would make 470 workers at its Hull Brough plant redundant if it didn't receive a contract from the MoD for Hawk jets. BAE Systems was duly given the contract even though the Treasury said an open competition would save the taxpayer £1 billion (£2 million for each of the 470 jobs!). In April 2004, less than a year on, BAE Systems announced the loss of 760 jobs and the following week a further 1,000 jobs. There has been little outcry. Jobs appear only to be important when BAE Systems wants to win a contract.

Tony Blair is fully aware of this so we need to look elsewhere to understand his enthusiasm for the company. The most likely explanation revolves around Blair's fondness for big business generally and his zeal for the grand foreign policy/military statement. BAE Systems brings these together in one entity and seems to hit all the right buttons.

BAE Systems continues to receive more than its fair share of corruption allegations. And, despite the unwillingness of the Serious Fraud Office (SFO) and the MoD to investigate, they won't go away.

In September 2003, the Guardian published details of its investigation into allegations of a £20m 'slush fund' set up by BAE Systems to bribe Saudi officials. It reported that a confidential letter from the head of the Serious Fraud Office (SFO) to the MoD alleged a possible fraud operation involving BAE Systems in relation to the massive Al Yamamah arms deals with Saudi Arabia. Neither the SFO nor MoD pursued the allegations despite being provided with a box of relevant invoices and other documents by a former employee of BAE Systems' front company.

Earlier allegations that BAE paid £7m commission into a Jersey trust for Qatar's foreign minister also ended with a failure to investigate. This, despite the SFO being asked for help by the Jersey authorities, and the UK Government admitting that it had a report of this commission payment in 1998.

Other allegations have been met with an alternative official response, if a similar end result. In June 2003 the Guardian alleged that 'BAE Systems paid millions of pounds in secret commissions' to win a South African Hawk jet contract. Astonishingly, it stated that the UK government had confirmed the payment but refused to reveal the amount paid. The DTI did, however, say it was 'within acceptable limits'!

There have been other allegations relating to the Czech Republic and India, but none of the allegations draw much of a reaction from BAE Systems. The company has a standard response of ignoring specific allegations and offering a variation on the theme, 'BAE operates rigorously within the laws of both the UK and countries in which it operates.' BAE Systems is certainly careful regarding corrupt practices, but the suspicion must be that it is careful to hide them rather than shun them. The Guardian recently reported that in 1997 BAE moved 'filing cabinets full of evidence of corrupt payments to foreign politicians to a vault in Switzerland' using a subsidiary registered in the Virgin Islands.

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  • 5 months later...

I am particularly interested in figures such as " Tommy the Cork" who seemed to be the hinge in the transition from the Keynsianism of the New Deal to what some call "military Keynsianism" of the Cold War.

Unlike Tommy Corcoran, Pat McCararran was a long time nemesis of FDR. He appears to have made a deal with a Neveda Defense Contractor BMI and its Manager E.O. Case in a N.L.R.B. dispute over who would represent the workers at the plant, the AFL or the more radical CIO. Author Michael J. Ybarra (Washington Gone Crazy: Senator Pat McCarran and the Great American Communist Hunt) argues that BMI, having just benefitted from massive federal largesse to build a new plant in West Las Vegas, now worked with McCarran to undermine the CIO at the plant and to tar McCarran's 1944 primary opponent as an abject tool of the CIO and Moscow. BMI money and influence was used to buy a significant part of the Las Vegas vote and was the difference in McCarrans' close primary call, according to Ybarra.

Also I'd like to draw forum members attention to this passage on page 380 of the same book:

Ickes didn't last long in Truman's cabinet. In 1946 McCarran sponsored the Tideland Oil

bill, which transferred control of offshore oil fields from the federal governement to the

states. McCarran saw it as an issue of local control; Ickes was it as a huge favor to the

oil industry and its lobbyists especially because Neveda had not tidelands of its own.

Truman opposed the bill, but supported Edwin Pauley, an oilman and major Democratic

bankroller whom the president nominated to become secretary of the navy

Edwin Pauley was head of the DNC in 1944 and was one of the key figures in getting FDR to dump Henry

Wallace in favor of Truman.

Does anyone know any other interesting details re: the Tidelands Oil bill of 1946, and or Edwin Pauley? On another link that was a PDF i had trouble downloading, it seemed to suggest that the Tideland Oil bill was not passed until 1953 and the John J. McCloy had something to do with it. Anyone know of how McCloy might be related to this bill that was a major goal of the oil lobby?

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The corporate media is rushing to blow Rahm E. and the utterly spineless best friend of the Dems financial sector, Chuck Schumer for steering the party to a" moderate" course.

This is seriously misleading. As a letter in today's times pointed out, many of the winning dems WERE moderate on social issues. But in many cases they were more outspokenly left on both Iraq and economic issues as compared with the last ten years. The corporate media is using the generalization "moderate" to obscure this critically important distinction, hence doing its best to watter down the mandate for change delivered on Tuesday. Indeed Prince Rahms' picks themselves were part of the same effort. His most famous choice was Tammy Duckworth, an Iraq vet who lost two limbs but was not at all angry about the war. One of her strongest denunciations about the war: there's good and bad in everything I guess. Maybe if Martin Luther King said that about Vietnam on April 4th 1967 at Riverside church he would be running the DNC by now!

Oh Tammy? She lost doing her job, as a well funded democrat running into the wind. We shouldn't judge just based on one example though. Check out how Clinton's boy wonder fared on his other 21 personal selections:

http://www.counterpunch.org/walsh11112006.html

This is Military Industrial Congessional Intelligence Party in action.

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I am particularly interested in figures such as " Tommy the Cork" who seemed to be the hinge in the transition from the Keynsianism of the New Deal to what some call "military Keynsianism" of the Cold War.

Have you read David McKean's book about "Tommy the Cork", Peddling Influence, it is a great book.

See these two threads for what I have found out about Tommy Concoran. You could argue he was the grandfather of the assassination of JFK.

http://educationforum.ipbhost.com/index.php?showtopic=5367

http://educationforum.ipbhost.com/index.php?showtopic=5799

http://www.spartacus.schoolnet.co.uk/JFKcorcoran.htm

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  • 4 weeks later...

An interesting article in Saturday's Guardian explaining how the MICIC is at work in Iraq:

http://www.guardian.co.uk/international/st...1962229,00.html

Julian Borger in Washington, David Pallister

Saturday December 2, 2006

The Guardian

The Iraqi government is in danger of being brought down by the wholesale smuggling of the nation's oil and other forms of corruption that together represent a "second insurgency", according to a senior US official. Stuart Bowen, who has been in charge of auditing Iraq's faltering reconstruction since 2004, said corruption had reached such levels that it threatened the survival of the state.

"There is a huge smuggling problem. It is the No 1 issue," Mr Bowen told the Guardian. The pipelines that are meant to take the oil north have been blown up, so the only way to export it is by road. "That leaves it vulnerable to smuggling," he said, as truckers sell their cargoes on the black market.

Mr Bowen, the Special Inspector General for Iraq Reconstruction (Sigir), cites Iraqi figures showing that the "virtual pandemic" of corruption costs the country $4bn (£2.02bn) a year, and some of that money goes straight to the Iraqi government's enemies. A US government report has concluded that oil smuggling abetted by corrupt Iraqi officials is netting insurgents $100m a year, helping to make them financially self-sustaining.

"Corruption is the second insurgency, and I use that metaphor to underline the seriousness of this issue," Mr Bowen said. "The deputy prime minister, Barham Saleh, told Sigir this summer that it threatens the state. That speaks for itself."

The Bush administration's strategy in Iraq hinges on the survival of the government run by Nuri al-Maliki, despite US reservations about the prime minister's readiness or ability to confront extremists in his own Shia community.

But Mr Bowen's office has found that the insurgents and militias have also been abetted by US incompetence. A recent audit by his inspectors found that more than 14,000 guns paid for out of US reconstruction funds for Iraqi government use could not be accounted for. Many could be in the hands of insurgents or sectarian death squads, but it will be almost impossible to prove because when the US military handed out the guns it noted the serial numbers of only about 10,000 out of a total of 370,000 US-funded weapons, contrary to defence department regulations.

Jim Mitchell, a Sigir spokesman, said: "The practical effect is that when a weapons cache is found you're deprived of the intelligence of knowing if they were US-provided, which might allow you to follow the trail to the bad guys."

Mr Bowen's inspectors are among the few US civilian officials who still venture beyond the fortified bounds of the Green Zone in Baghdad into the rest of Iraq, to see how $18bn of American taxpayers' money is being spent. Much of the money has been wasted. Sigir officials have referred 25 cases of fraud to the justice department for criminal investigation, four of which have led to convictions, and about 90 more are under investigation.

A culture of waste, incompetence and fraud may be one legacy the occupiers have passed on to Iraq's new rulers more or less intact. Mr Bowen's office found that nearly $9bn in Iraqi oil revenues could not be accounted for. The cash was flown into the country in shrink-wrapped bundles on military transport planes and handed over by the ton to Iraqi ministries by the Coalition Provisional Authority (CPA) run by Paul Bremer, a veteran diplomat. The money was meant to demonstrate the invaders' good intentions and boost the Iraqi economy, which Mr Bremer later insisted had been "dead in the water". But it also fuelled a cycle of corruption left over from Saddam Hussein's rule.

"We know it got to the Iraqis, but we don't know how it was used," Mr Bowen later told Congress.

In the Hillah region a defence department contract employee and two lieutenant colonels were found to have steered $8m in contracts to a US contractor in return for bribes. The Pentagon contract employee, Robert Stein, pleaded guilty earlier this year, admitting he and his co-conspirators received more than $1m in cash, help with laundering the funds, jewellery, cars and sex with prostitutes. Stein also admitted that they simply stole $2m from the construction fund, accounting for the money with receipts from fictitious construction companies.

Hillah just happened to be the district Mr Bowen's inspectors examined in depth. It is still far from clear how much reconstruction money has gone missing around the whole country.

A potentially far more serious problem has been the way the US government decided to give out reconstruction contracts. It split the economy into sectors and shared them out among nine big US corporations. In most cases the contracts were distributed without competition and on a cost-plus basis. In other words the contractors were guaranteed a profit margin calculated as a percentage of their costs, so the higher the costs, the higher the profits. In the rush to get work started the contracts were signed early in 2004. In many cases work did not get under way until the year was nearly over. In the months between, the contractors racked up huge bills on wages, hotel bills and restaurants.

According to a Sigir review published in October, Kellogg, Brown and Root (a subsidiary of Halliburton, Vice President Dick Cheney's former company) was awarded an oil industry repair contract in February 2004 but "direct project activity" did not begin until November 19. In that time KBR's overhead costs were nearly $53m. In fact more than half the company's $300m project costs from 2004-06 went on overheads, the audit found.

Iraq also represented a grey zone beyond the reach of the US civil courts. KBR was found to have overcharged the US military about $60m for fuel deliveries, but that did not stop it winning more government contracts.

A California company, Parsons, had its contract terminated this year after it was found to have finished only six of more than 140 primary healthcare centres it was supposed to build, after two years work and $500m spent. However, the contract was ended "for convenience", meaning Parsons was paid in full. In a police college Parsons built for $75m in Baghdad the plumbing was so bad that urine and excrement rained down from the toilets on to the police cadets. Parsons left a sub-contractor to do repairs but in general there is little punitive action that can be taken for shoddy work.

Part of the reason big US contractors have been able to get away with so much is that there has been limited proper supervision. CPA employees were picked not for their financial expertise but for their political loyalty.

Mr Bowen would have passed the test. He campaigned for George Bush in Texas and was one of the small army of Republican lawyers called in to Florida in 2000 to oversee the vote recounts on Mr Bush's behalf. When he started the job in March 2004 few expected he would do anything to embarrass the administration.

However, Mr Bowen has emerged as the scourge of the big corporations who are among the Republican party's biggest donors. Earlier this year a clause extending his mandate was stripped from a military spending bill just before a vote. Sigir, however, seems to have been saved by the Democratic victory in last month's elections.

Mr Bowen bristles at the suggestion that Mr Bush might have had a hand in the attempt to close his office. "I'm doing exactly what the president expects me to do," he said.

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  • 3 months later...
An interesting article in Saturday's Guardian explaining how the MICIC is at work in Iraq:

http://www.guardian.co.uk/international/st...1962229,00.html

Julian Borger in Washington, David Pallister

Saturday December 2, 2006

The Guardian

The Iraqi government is in danger of being brought down by the wholesale smuggling of the nation's oil and other forms of corruption that together represent a "second insurgency", according to a senior US official. Stuart Bowen, who has been in charge of auditing Iraq's faltering reconstruction since 2004, said corruption had reached such levels that it threatened the survival of the state.

"There is a huge smuggling problem. It is the No 1 issue," Mr Bowen told the Guardian. The pipelines that are meant to take the oil north have been blown up, so the only way to export it is by road. "That leaves it vulnerable to smuggling," he said, as truckers sell their cargoes on the black market.

Mr Bowen, the Special Inspector General for Iraq Reconstruction (Sigir), cites Iraqi figures showing that the "virtual pandemic" of corruption costs the country $4bn (£2.02bn) a year, and some of that money goes straight to the Iraqi government's enemies. A US government report has concluded that oil smuggling abetted by corrupt Iraqi officials is netting insurgents $100m a year, helping to make them financially self-sustaining.

"Corruption is the second insurgency, and I use that metaphor to underline the seriousness of this issue," Mr Bowen said. "The deputy prime minister, Barham Saleh, told Sigir this summer that it threatens the state. That speaks for itself."

The Bush administration's strategy in Iraq hinges on the survival of the government run by Nuri al-Maliki, despite US reservations about the prime minister's readiness or ability to confront extremists in his own Shia community.

But Mr Bowen's office has found that the insurgents and militias have also been abetted by US incompetence. A recent audit by his inspectors found that more than 14,000 guns paid for out of US reconstruction funds for Iraqi government use could not be accounted for. Many could be in the hands of insurgents or sectarian death squads, but it will be almost impossible to prove because when the US military handed out the guns it noted the serial numbers of only about 10,000 out of a total of 370,000 US-funded weapons, contrary to defence department regulations.

Jim Mitchell, a Sigir spokesman, said: "The practical effect is that when a weapons cache is found you're deprived of the intelligence of knowing if they were US-provided, which might allow you to follow the trail to the bad guys."

Mr Bowen's inspectors are among the few US civilian officials who still venture beyond the fortified bounds of the Green Zone in Baghdad into the rest of Iraq, to see how $18bn of American taxpayers' money is being spent. Much of the money has been wasted. Sigir officials have referred 25 cases of fraud to the justice department for criminal investigation, four of which have led to convictions, and about 90 more are under investigation.

A culture of waste, incompetence and fraud may be one legacy the occupiers have passed on to Iraq's new rulers more or less intact. Mr Bowen's office found that nearly $9bn in Iraqi oil revenues could not be accounted for. The cash was flown into the country in shrink-wrapped bundles on military transport planes and handed over by the ton to Iraqi ministries by the Coalition Provisional Authority (CPA) run by Paul Bremer, a veteran diplomat. The money was meant to demonstrate the invaders' good intentions and boost the Iraqi economy, which Mr Bremer later insisted had been "dead in the water". But it also fuelled a cycle of corruption left over from Saddam Hussein's rule.

"We know it got to the Iraqis, but we don't know how it was used," Mr Bowen later told Congress.

In the Hillah region a defence department contract employee and two lieutenant colonels were found to have steered $8m in contracts to a US contractor in return for bribes. The Pentagon contract employee, Robert Stein, pleaded guilty earlier this year, admitting he and his co-conspirators received more than $1m in cash, help with laundering the funds, jewellery, cars and sex with prostitutes. Stein also admitted that they simply stole $2m from the construction fund, accounting for the money with receipts from fictitious construction companies.

Hillah just happened to be the district Mr Bowen's inspectors examined in depth. It is still far from clear how much reconstruction money has gone missing around the whole country.

A potentially far more serious problem has been the way the US government decided to give out reconstruction contracts. It split the economy into sectors and shared them out among nine big US corporations. In most cases the contracts were distributed without competition and on a cost-plus basis. In other words the contractors were guaranteed a profit margin calculated as a percentage of their costs, so the higher the costs, the higher the profits. In the rush to get work started the contracts were signed early in 2004. In many cases work did not get under way until the year was nearly over. In the months between, the contractors racked up huge bills on wages, hotel bills and restaurants.

According to a Sigir review published in October, Kellogg, Brown and Root (a subsidiary of Halliburton, Vice President Dick Cheney's former company) was awarded an oil industry repair contract in February 2004 but "direct project activity" did not begin until November 19. In that time KBR's overhead costs were nearly $53m. In fact more than half the company's $300m project costs from 2004-06 went on overheads, the audit found.

Iraq also represented a grey zone beyond the reach of the US civil courts. KBR was found to have overcharged the US military about $60m for fuel deliveries, but that did not stop it winning more government contracts.

A California company, Parsons, had its contract terminated this year after it was found to have finished only six of more than 140 primary healthcare centres it was supposed to build, after two years work and $500m spent. However, the contract was ended "for convenience", meaning Parsons was paid in full. In a police college Parsons built for $75m in Baghdad the plumbing was so bad that urine and excrement rained down from the toilets on to the police cadets. Parsons left a sub-contractor to do repairs but in general there is little punitive action that can be taken for shoddy work.

Part of the reason big US contractors have been able to get away with so much is that there has been limited proper supervision. CPA employees were picked not for their financial expertise but for their political loyalty.

Mr Bowen would have passed the test. He campaigned for George Bush in Texas and was one of the small army of Republican lawyers called in to Florida in 2000 to oversee the vote recounts on Mr Bush's behalf. When he started the job in March 2004 few expected he would do anything to embarrass the administration.

However, Mr Bowen has emerged as the scourge of the big corporations who are among the Republican party's biggest donors. Earlier this year a clause extending his mandate was stripped from a military spending bill just before a vote. Sigir, however, seems to have been saved by the Democratic victory in last month's elections.

Mr Bowen bristles at the suggestion that Mr Bush might have had a hand in the attempt to close his office. "I'm doing exactly what the president expects me to do," he said.

_____________________________________________

Dear Mr. Simkin,

This is all very interesting but what does it have to do specifically with the assassination of an American President by the name of John Fitzgerald Kennedy? We already know that the George Walker Bush administration is full of incompetent (and downright evil) people, and that there are a lot of corrupt Iraqis as well, and that a certain "Mr. George Bush of the CIA" was mentioned in a famous FBI memo right after the assassination, etc etc etc, but could you please try to "connect the dots" a bit more so that we can finally figure out, with appropriate documentation, who the (M*#@^%#*^@G B$&^@&*S) were who murdered JFK? Specifically?

Thank you in advance,

--Thomas

_____________________________________________

Edited by Thomas Graves
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